Growth prospects in Asian DCS market thrill control suppliers

Dedham, MA—The distributed control systems (DCS) market in Asia is expected to grow at an average annual rate of 6.3% from just over $2.6 billion in 2003 to more than $3.5 billion in 2008, according to “DCS Outlook for Asia–Market Analysis and Forecast through 2008” by ARC Advisory Group.

By Control Engineering Staff

09/07/2004

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Dedham, MA— The distributed control systems (DCS) market in Asia is expected to grow at an average annual rate of 6.3% from just over $2.6 billion in 2003 to more than $3.5 billion in 2008, according to “DCS Outlook for Asia–Market Analysis and Forecast through 2008” by ARC Advisory Group .

In Asia, and particularly in China and India, new plants are opening, even in core sectors, such as cement, chemical, power, and steel. These new plants spur demand for DCSs, and create new opportunities for control system suppliers.

“The high growth levels in the Asian DCS market are primarily tied to basic infrastructural development and capital projects occurring in China, and, to a lesser degree, in India and Southeast Asia,” says Larry O’Brien, ARC’s research director. “There is still significant growth potential in basic industries such as refining, chemicals, power, and pulp and paper.”

Home to almost 60% of the world’s population, Asia is undergoing an economic transformation, with China and India emerging as the continent’s twin engines of economic growth. Likewise, its burgeoning middle class means that Asia’s appetite for energy and manufactured goods is spurring growth in its manufacturing industries. With industry thriving and manufacturers applying control systems to gain sustainable competitive advantages, the continent’s DCS market will continue to experience strong growth over the next five years.

“While an expanding market assures business growth for suppliers, the challenge is to gain a good understanding of the uniqueness of the Asian DCS market and developing appropriate strategies that will give suppliers an edge,” adds O’Brien. While local suppliers dominate the Japanese DCS market, European and North American companies capture the majority of the Asian DCS market outside of Japan. However, in China and India, some homegrown DCS suppliers are beginning to challenge the dominance of these global suppliers.

Because of efforts to keep up with overall demand, ARC expects new plant and factory construction in Asia will continue at a healthy pace through the next five years, barring any unforeseen actions by governments, such as China, to cool down growth. At the same time, users in Asia are demanding many of the latest technologies, and are investing heavily in education and workforce training to use advanced technologies effectively.

Conversely, Asian users and buyers are known for being very price conscious, making it difficult for suppliers to actually make money off many of the large-scale projects they’re bidding on in Asia. Many automation suppliers lament that, while the majority of revenue growth for their DCS business comes from Asia, they still make most of their profit in developed markets, such as North America and Europe.